It would make more sense if community just set up contracts amongst themselves to pool together with monthly community fund added to the pile and if something happened, then a clause in the contact begins and facilitate the steps to release fund for that person. Contract could set up arbiter (paid hourly) to determine whether the claim is covered by the contract agreed by the subscribers.
The major difference in this model is basically that the perverse incentive is removed whereas commercial insurance have every incentives not to pay out to claimants which defeats the purpose of insurance in the first place.
I don’t know much about insurance laws or contracting to say for sure, but part of me is wondering why we haven’t popularize this idea yet.